Netflix's Hastings: Online steering TV's future

The future of television will be driven by Internet networks, and traditional cable TV companies will inevitably morph into Web-based content providers, Netflix CEO Reed Hastings predicted Tuesday.

The flexibility of Internet programming is already attracting content creators, and even online video providers are getting into the production game themselves, Hastings said during a meeting at POLITICO as part of a D.C. swing to promote his company’s Washington-based TV series, “House of Cards.”

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“What we’ll see in the Internet is most cable networks will become Internet networks — we’ll still call ESPN a cable network, but it’ll be mostly delivered over the Internet in 10 or 20 years. The fundamental advantage of the Internet is individualization, control, being able to watch on any screen. It’s just a much better technology substrate for video.”

Personalized advertising streams will help drive the move to the Web, Hastings said, as will the roll-out of very high-speed broadband networks. But just as cable networks grew from running others' content to also commissioning their own, the TV and movie distributor is following the same path.

“We’re embarking on this really big phase of pioneering original content,” Hastings said. “It’s different — you’ve got creative risks, operational risks, your financing — it’s much more ambitious. But it’s the natural thing that you grow into,” he added, touting this week’s release of the 13-episode production starring Kevin Spacey.

Much of Netflix’s growth has come in fairly unregulated spaces like DVD-by-mail and online streaming. But that hasn’t kept the company from retaining a D.C. presence. Netflix dropped slightly more than $1 million in D.C. lobbying in 2012 — a pittance compared with many top tech companies but double the $500,000 it spent the year before. Much of that regulatory focus congealed around a just-passed update to the Video Privacy Protection Act.

Known colloquially as the Netflix bill, the law now allows users to give online video providers blanket consent for up to two years to share their rental history with social networks like Facebook. Some reports criticized the legislation as anti-privacy, but Hastings said that’ll change once people have a chance to use the feature.

“It’s in a vacuum, because no one can use the Netflix social aspect yet. Once people get to see it, they are going to not see it as an invasion of privacy,” he said.

More broadly, the company also has a dog in the industry fight over net neutrality and data caps. But there’s not a huge war to wage — at least right now, Hastings said.

“It’s ambiguous right now because there aren’t big problems. … There’s big threats, but, in general, the Internet is working really well,” he said. “Uncapped is better for sure, like Google Fiber. But we’re not at some big crisis point. So it behooves us at Netflix to stay active in it and keep people aware of it, and it may be that if there’s enough talk about what’s important then the companies will be thoughtful and we really won’t have to get into a heavy regulatory scheme, which is hard to figure out anyway.”

This article first appeared on POLITICO Pro at 4:42 p.m. on January 29, 2013.